Any type of loan can be a long, drawn-out process. Most adults have had the experience of getting a mortgage, student loan or something as simple as a credit card or auto loan. Anyone that has gotten a mortgage in the last decade has experienced the task of coming up with all the proper paperwork and basically go down to their bank or their broker to provide them with that information. Then the back and forth process ensues that can be quite lengthy, so inherently, people have this view of lending that it's terribly complicated; and that's what SnapCap is trying to change.
The component pieces SnapCap looks at are credit, credit score of the individual owner (which is a function of any lending decision), time in business -which has a great deal to do with your continuity- and your annual revenue. Naturally, a business that started six months or a year ago is inherently much riskier than one that's been around for two, three or ten years.
The main value provided to borrowers and that SnapCap does way better than anyone else right now is near-live interaction. Someone who comes to the website, completes an application and provides their basic information is often contacted while still on the website. SnapCap strives to reach out to their users within 30 seconds of the application. It's hard to find that type of customer service anywhere else, in almost any other industry online and offline.
For example, let's say a business owner visits SnapCap.com and needs $100,000 within a week for a seasonal inventory spike that they may not have anticipated. They're going to fill out a very basic application, provide 90 days' bank data and some additional clarifying information, and they will then be on a fast-track to a loan decision.
Trust in Lending
SnapCap strives to gain the trust of their applicants before asking for detailed, personal information. "With us, we're looking to provide value to the businesses we give money to, so one thing we found that we do particularly well is we get people on the phone," said Hunter Stunzi, founder of SnapCap. "We have good quality conversations with our customers, educate them on how these loans work, and discuss the upside and value of the loan."
Business owners don't have to worry about SnapCap collecting their social security numbers, tax IDs or other intrusive information when they first apply for a business loan online. "We think it's inappropriate and a lot of our competitors do that," said Stunzi. All the user needs to do initially is provide their basic information and a loan advisor will give them a call to explain the process. At that point, the consumer can decide if it's a right fit for them and how to move forward.
Borrowers who pay their loans back on time will be pleased to learn that it doesn't go unnoticed. Responsible borrowers may be extended greater benefits in the future in the form of larger loans, longer terms, or something as simple as lower interest rates. The key to any business model is to retain good, quality users.
Behind the Scenes
The technology piece is really the best component of SnapCap's business. Thanks to the digital age where everything is readily available online, consumers can now provide all the required information very fast. Once a tax ID number has been provided, a loan advisor can then do a LexisNexis search and see if the business is in good standing with the secretary of state, if they pay taxes and check if there's anything major or derogatory that might make it irresponsible to approve a loan.
Once a borrower submits their social security number, SnapCap has a pretty good window into their credit history and who they are as a borrower. Someone who is totally maxed out with all of their trade lines, at risk for bankruptcy, not paying their mortgage, etc., won't be an appropriate borrower. This type of analysis is very important due to the short-term loans that are provided, which are typically 6, 9, 12, and 18-month loans.
"What we think we've solved is the ability to acquire users online at a very attractive price point relative to our competitors. It's not just because we're able to spend money more efficiently, but we're also interacting with the user in a real-time environment that makes them feel valuable."